A&H SPORTSWEAR CO. v. Victoria's Secret Stores

• Decision Date: 24 May 1996
• Docket Number: Civil Action No. 94-7408.
• Citation: 926 F. Supp. 1233
• Parties: A&H SPORTSWEAR CO., INC. and Mainstream Swimsuits, Inc., Plaintiffs and Counterclaim-Defendants, v. VICTORIA'S SECRET STORES, INC. and Victoria's Secret Catalogue, Inc., Defendants and Counterclaim-Plaintiffs.
• Court: U.S. District Court — Eastern District of Pennsylvania

926 F. Supp. 1233

A&H SPORTSWEAR CO., INC. and Mainstream Swimsuits, Inc., Plaintiffs and Counterclaim-Defendants, v.VICTORIA'S SECRET STORES, INC. and Victoria's Secret Catalogue, Inc., Defendants and Counterclaim-Plaintiffs.

Civil Action No. 94-7408.

United States District Court, E.D. Pennsylvania.

May 24, 1996.

Arthur H. Seidel, Stephen J. Meyers, Ronald N. Weikers, Philadelphia, PA, Norman Seidel, Easton, PA, for plaintiffs.

Frank J. Colucci, Richard P. Jacobson, New York City, H. Robert Fiebach, Julie Merritt Pacaro, Cozen and O'Conner, Philadelphia, PA, for defendants.

DECISION AND ORDER

VAN ANTWERPEN, District Judge.

I.INTRODUCTION

This action arises under the common law, Sections 32and43(a) of the Trademark Act of 1946(the Lanham Act), 15 U.S.C. §§ 1114,1125(a), and the Pennsylvania Antidilution Law, 54 Pa.C.S.A. § 1124.The parties are diverse in citizenship and the amount in controversy exceeds $50,000 exclusive of interests and costs.This court has jurisdiction pursuant to 28 U.S.C. §§ 1331,1332,1337,1338and1367.Venue in this court is proper under 28 U.S.C. § 1391.Plaintiffs have chosen to bring this action directly in District Court pursuant to 28 U.S.C. § 1338 rather than through the adjudication process of the Patent and Trademark Office.On December 8, 1994, A & H Sportswear filed their complaint alleging trademark infringement of their MIRACLESUIT trademark by Defendants' THE MIRACLE BRA and THE MIRACLE BRA line of products.Pursuant to a telephone conference of June 13, 1995 and an order of June 15, 1995, the parties agreed to consolidate a hearing on a preliminary injunction with a trial on the merits.We deemed letters from counsel a stipulation waiving a jury trial in our order of July 31, 1995.In our order of October 20, 1995, we granted Defendants' motion for separate trials on the issues of liability and damages.A two-week non-jury civil trial to determine issues of liability was conducted from October 25 to November 3, 1995.Due to its commercially sensitive nature, numerous papers were filed under seal and three segments of confidential testimony were received during trial.Pursuant to F.R.Civ.P. 52(a)we make the following findings¹ of fact:

II.FINDINGS OF FACT

A.PARTIES AND PRODUCTS

1.PlaintiffA & H Sportswear, Co., Inc.("A & H") is a corporation organized and existing under the laws of Pennsylvania, having a place of business at Routes 191 and 33, Stockertown, Pennsylvania 18083.Exhibit D-231.A & H manufactures women's swimwear, including the MIRACLESUIT swimsuit in issue in this action.M. Waldman, 10/27/95, p. 98:20 to p. 105:7, Exhibits P-53, P-54.A & H's trademark registration, registered October 27, 1992, for MIRACLESUIT covers swimwear in International Class 25, which is a registration category for clothing apparel.B. Waldman, 10/25/95, p. 175:14 to p. 176:14; Exhibit P-1.A & H manufactures four million swimsuits, or approximately ten percent of all swimsuits annually sold in the U.S. B. Waldman, 10/25/95, p. 79:17 to p. 80:1.

2.Mainstream Swimsuits, Inc.("Mainstream"), is a corporation organized and existing under the laws of the state of Pennsylvania.Exhibit D-229.Mainstream is the exclusive distributor of MIRACLESUIT products manufactured by A & H. Mainstream purchases MIRACLESUIT swimsuits from A & H for which A & H then invoices Mainstream.Mainstream sells MIRACLESUIT swimwear nationwide.Mainstream also maintains a corporate showroom in New York City at which MIRACLESUIT swimsuits and other Mainstream lines are shown to trade customers.B. Waldman, 10/23/95, p. 141:11 to p. 143:19.A & H ships MIRACLESUIT swimsuits directly to Mainstream's customers.B. Waldman, 10/23/95, p. 68:1 to p. 69:7, p. 70:5-17, p. 138:25 to p. 141:9; Exhibits P-25, P-62A & B. SWIM SHAPER is a division of Mainstream swimsuits which was established to market the MIRACLESUIT line.The MIRACLESUIT sales invoices are captioned "MIRACLESUIT™ by SWIM SHAPER™".Retailers and other wholesale purchasers of the MIRACLESUIT make their checks payable to MIRACLESUIT BY SWIM SHAPER or to SWIM SHAPER.A & H and Mainstream (hereinafter referred to collectively as "A & H"), are closely held and owned exclusively by members of the Waldman family.B. Waldman, 10/23/95, p. 64:5 to p. 67:22; Exhibit P-40.

3.The total MIRACLESUIT product line consists of one-piece and two-piece swimsuits with push-up bras, constructed/shaping bras, and unconstructed bras as well as leotards and shorts and non-control cover-ups, dresses, jackets and pareos.B. Waldman, 10/23/95, p. 96:3 to p. 101:22, p. 113:22 to p. 115:23; Exhibits P-4, P-6 and P-7.A & H attaches hang-tags bearing the words "MIRACLESUIT™ by SwimShaper" to its swimsuits.B. Waldman, 10/23/95, p. 88:23 to p. 89:18, Exhibit P-30.MIRACLESUIT currently appears both on A & H's swimsuits' sewn-in labels and on the separate hang tag.Sewn-in labels were first used following this lawsuit's filing.M. Waldman, 10/27/95, p. 137:15 to p. 138:7; Exhibit P-30B.

4.A & H now also sells MIRACLESUIT cover-ups and jackets.B. Waldman, 10/23/95, p. 115:25 to p. 121:14, p. 139:7 to p. 141:2; Exhibit P-8.During the 1993-94 season, A & H offered two styles of jackets, a pareo, a big shirt and a coverup under the MIRACLESUIT name.B. Waldman, 10/26/95, p. 144:18 to p. 145:4; Exhibit P-3D.During the 1995 season, A & H began manufacturing bike shorts, short shorts, a leotard and a tank dress under the MIRACLESUIT name.B. Waldman, 10/26/95, p. 145:6 to p. 147:24; Exhibit P-3C.A & H also now sells MIRACLESUIT dresses for which it has received orders from independent sales representatives, Bloomingdale's, and other stores.Sacco, 10/24/95, p. 76:14-17;B. Waldman, 10/27/95, p. 6:3 to p. 7:20; Exhibit D-259;B. Waldman, 10/26/95, p. 191:11 to p. 192:1.Mainstream's independent sales representatives represent the MIRACLESUIT line nationally to the trade for Mainstream.B. Waldman, 10/23/95, p. 141:14 to p. 143:24; Exhibit P-38.

5.DefendantVictoria's Secret Stores, Inc.("VS Stores"), sells lingerie and swimwear nationwide in retail stores.VS Stores is incorporated in the State of Delaware and is qualified to do business in all states except Arkansas, Hawaii, Montana and South Dakota.VS Stores owns and operates approximately 650 retail stores located nationwide under the name VICTORIA'S SECRET.Most are located in regional malls.Nichols, 10/31/95, p. 117:7-18.VS Stores is headquartered in Columbus, Ohio.The marketing department for VS Stores is located in New York, New York;Nichols, 10/31/95, p. 156:20-22.VS Stores is the dominant specialty retailer of ladies' lingerie in the United States.Nichols, 10/31/95, p. 118:6-7.VS Stores' sales are derived from intimate apparel (85 percent), hosiery (2 percent) and the balance from fragrances and toiletries.Nichols, 10/31/95, p. 118:20-22, 120:16-18;Felder, 11/01/95, p. 132:20-23.VS Stores' total revenue is approximately twice that of VS Catalogue.VS Stores' sales from intimate apparel are roughly five times the comparable sales by Victoria's Secret Catalogue.Fedus, 11/01/95, p. 161:11-14.VS Stores has therefore assumed a primary role in naming apparel.Fedus, 11/01/95, p. 163:24 to 164:2.Bras are VS Stores' number one category of sales.Felder, 11/01/95, p. 91:1-2.The vast majority of VS Stores merchandise bears the VICTORIA'S SECRET trademark and trade name.The remaining items are mostly test merchandise.Nichols, 10/31/95, p. 124:9-14.VS Stores has tested swimwear three or four times over eight or nine years, selling both branded and unbranded swimwear.Nichols, 10/31/95, p. 141:20 to p. 142:14;Nichols Depo, exhibit P-205, 09/07/95, p. 36:7 to p. 37:4.Grace Nichols has been the President of VS Stores since 1991.Nichols, 10/31/95, p. 112:10-13.

6.Victoria's Secret Catalogue ("VS Catalogue"), is a mail order business that — although smaller in size — sells a broader range of products than VS Stores, including intimate apparel, sportswear, dresses, accessories, shoes and swimwear.Nichols, 10/31/95, p. 120:19-20;Felder, 10/26/95, p. 90:5-6.VS Catalogue is a Delaware corporation with headquarters in New York City and its distribution center in Columbus, Ohio.Approximately 30 different issues of the VICTORIA'S SECRET catalogue are mailed on an annual basis.VS Catalogue circulates over 300 million catalogues annually.Berkman, 11/01/95, p. 224:21 to p. 225:3;Fisher Depo, Exhibit P-202, 08/09/95, p. 53:8-17.VS Catalogue derives approximately thirty-five percent (35 percent) of its sales from lingerie and intimate apparel.The balance comes from other apparel including dresses, coats, suits, swimwear and sportswear.Fedus, 11/1/95, 160:22-24, 163:3-4.Cynthia Fedus has been the President and Chief Executive Officer of VS Catalogue since 1988.Fedus, 11/01/95, p. 153:9-14.

7.VS Stores and VS Catalogue are both wholly-owned subsidiaries of Intimate Brands, Inc.The Limited, Inc., which was formerly the parent corporation of VS Stores and VS Catalogue, now owns 85 percent of Intimate Brands, Inc. Nichols, 10/31/95, p. 115:19-21, p. 116:5-10;Fedus, 11/01/95, p. 156:24-25.The Limited maintains offices in London, Paris and Milan as well as Hong Kong, Taiwan and Korea.Nichols, 10/31/95, p. 123:2-3;Fedus, 11/01/95, p. 157:6-11.These offices arrange for transportation when executives and employees of its subsidiary companies travel.They also give their impressions of developing fashion trends to those same companies.Fedus, 11/01/95, p. 157:11 to p. 158:2.The London office frequently guides Victoria's Secret's executives on shopping trips there.Felder, 10/26/95, p. 36:10-12.

8.Defendants monitor the domestic and international women's fashion scene.Fedus Depo, Exhibit P-201, 8/9/95, p. 39:24 to p. 40:15.Defendants' efforts to monitor the women's fashion market include: (1) visits by VS Catalogue's fashion and design teams to fabric fairs and designer runway shows;...